Over-55s in Wales are dipping into savings to pay off their debts, research showing debts at an all-time low and dropping savings levels suggests.

Over-55s in Wales are dipping into savings to pay off their debts, research showing debts at an all-time low and dropping savings levels suggests.

The latest Aviva Real Retirement Report has found that while over-55s in Wales have seen a 12% drop in their savings pots from Q4 2011 when they had an average of £12,499 to £10,999 in Q4 2012, their average amount of outstanding debt is at an all-time low.

The shrinking savings pots may be a result of over-55s in Wales typically saving just £18 per month, considerably less than the national average of £28.67.

Only 6% of over-55s in Wales have unsecured debts, and those who do owe far less, an average of £8,700, than the national average of £23,676, suggesting debt repayment has been a priority in Wales.

Iwan Rhys Roberts of Age Cymru said: “While it is welcome news that the debts of over 55s in Wales are at an all-time low, it is a concern that they are cutting back on their savings, and that they have fewer savings than the UK average.

“The rising cost of living is clearly a big worry for many older people in Wales, as is the issue of finding the money to pay for unexpected expenses over the next 12 months.

“It is a scandal that an estimated 119,000 older people in Wales are forced to deal with the effects of poverty and survive on tiny incomes as the cost of basic, day-to-day essentials continues to rise.

“We need action from the Welsh and UK Governments to tackle this problem and a long-term commitment to progressively reduce poverty year-on-year.”

Bridgend-based financial adviser Mark Ryan said he is currently being kept busy by 55 to 65 year olds worried about the increasing cost of living.

He said: “People are more and more using capital from deposit savings, not only to help themselves but to help their children and grandchildren to get a car or to get married or to get a deposit for a house.

“I think grandparents are being more and more generous than they’ve ever been.”

He said some parents were having to put plans for their financial future on hold while they help out their children.

He said: “People are carrying mortgages until 55, 60, 65 because they’ve had to fund their children’s education out of their income or capital and not been able to reduce their mortgages. It’s definitely the mortgages have lasted longer.

“It’s a huge financial impact on parents and grandparents at the moment. They seem to be taking the burden of absorbing most of the cost of education, cars, weddings and house deposits.

“There’s a number of parents who’ve sacrificed their financial wellbeing. They’ve delayed paying off their mortgage for maybe five years to help their children, which is honourable.”

Clive Bolton, managing director, At Retirement, Aviva, said: “It is great to see that over-55s in Wales are making a conscious effort to reduce their outstanding debts, with the average amount owed in Wales the lowest in the country.

“However, it is important to remember that frequently dipping into your savings pot, even with the best intentions, could lead to trouble in the future, especially as so many over-55s are concerned about the rising cost of living and unexpected expenses.

“A more balanced approach that still allows for monthly saving as well as being able to chip away at any existing debts is likely to be key.”

The report also found the typical net monthly income for over-55s in Wales has increased by 11% from £1,100 in Q4 2011 to £1,221 in Q4 2012, although this is significantly below the UK average of £1,444.

While around one in 10 (11%) of over-55s in Wales live on less than £500 per month, this has noticeably improved since Q4 2011 when over a fifth (21%) earned less than £500 a month. At the other end of the scale, 23% of Welsh over-55s earn more than £2,500 per month: one per cent more than the national average (22%).

The biggest expenses for over-55s in Wales as a percentage of monthly income are housing (22%), food (15%) and debt repayment (12%). Around half, 56%, of over-55s in Wales own their house outright.

The main concerns for over-55s in Wales over the next six months are the rising cost of living (73%), unexpected expenses (50%) and falling return on savings (35%).

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